Gas taxes are excise taxes that you pay when you fill up your car with gas. The federal government and all 50 U.S. states impose gas taxes, with much of the revenue raised going toward fixing highways and other 澳洲幸运5官方开奖结果体彩网:infrastructure projects.

State gas taxes range from just under 9 cents per gallon in Alaska to nearly 78 cents per gallon in California, though some states charge based on the amount spent rather than the volume of fuel purchased.

How Have State Gas Taxes Evolved?

History of Gas Taxes

U.S. states have levied gas taxes since the early days of automobile travel. In 1919, a little over a decade after Henry Ford’s Model T made owning a car affordable for the masses, Oregon became the first state to adopt a gas tax—at 1 cent per gallon.

Within 10 years, every state was collecting gas taxes. The federal government followed suit in 1932, establishing a nationwide gas tax of 1 cent per gallon in an attempt to shrink a budget deficit rising as a result of the Great Depression.

The basic concept behind the tax is the 澳洲幸运5官方开奖结果体彩网:benefits received rule: The notion that people should be taxed based on how much they benefit from government spending. Thus, 澳洲幸运5官方开奖结果体彩网:drivers pay a gas tax to help cover the cost of building and maintaining roads, bridges, and tunnels—and to address the probl✱ems of traffic congestion and pollution.

Current Problems

Unfortunately, the revenue raised from gas taxes has failed to keep up with rising infrastructure costs and inflation. The 澳洲幸运5官方开奖结果体彩网:development of electric vehicles and increased fuel efficiency of all autos have reduced gas demand relative to vehicle miles traveled, further widening the gap between the gas tax funds raised and road maintenance costs.

While the federal gas tax has been stuck at 18.4 cents a gallon since 1993, the increasing squeeze on transportation budgets has led many states to raise the gas tax in recent years. Thirty-three states have done so since 2013.

More states are also changing how their motor fuel excise taxes work to try to 澳洲幸运5官方开奖结果体彩网:keep up with rising gas prices and inflation. Nearly half of the states now have variable-rate gas taxes, using formulas linked to everything from the price of gas and the 澳洲幸运5官方开奖结果体彩网:Consumer Price Index (CPI) to fuel efficiency and population growth. For example, Indiana links its gas tax rate to the rates of inflation and personal income growth.

Most states assess a variety of taxes and fees on top of the gas tax, including environmental, underground storage, and inspection fees. Other types of fuel are taxed as well, including diesel, ethanol, aviation fuel, and alternatives including natural gas.

How Much Are State Gas Taxes?

When you add up all the taxes and fees, the average state gas tax stood at 32.26 cents per gallon on July 1, 2023, according to the U.S. 澳洲幸运5官方开奖结果体彩网:Energy Information Administration. Throw in the 18.4 cents federal tax, and the total gas tax rises to 50 cents per gallon.

Gas taxes thus accounted, on average, for about 15% of the average retail gasoline price of $3.50 per gallon of regular unleaded as of November 2023.

Here’s a rundown of the gas taxes in each state, including othe🅰r taxes and fees, as of July 2023:

Source: U.S. Energy Information Administration

What Do Gas Taxes Cover?

The bulk of revenue from gas taxes goes toward fixing wear and tear on the country’s roadways from all that driving. In fact, about half of the states have laws requiring that money raised by fuel taxes pay for roads and bridges. Most of the other states dedicate the revenue toward various modes of transportation, with New York spending more than a third of its gas tax proceeds on mass transit.

Some states use the money for transportation-related purposes, such as law enforcement, environmental protection, and education. For example, Texas dedicates a quarter of its gas tax revenue to schools.

At the federal level, nearly all funding goes into the Highway Trust Fund. One-tenth of a cent in federal taxes from each fuel gallon goes toward cleaning up leaks from underground petroleum storage tanks. Out of the 18.3 cents per gallon federal tax, 15.44 cents goes to the highway account. The mass transit account receives 2.86 cents. This is the latest information, which is from 2021. Note that the federal tax is 18.4 cents per gallon.

However, gas taxes raised at the state and federal levels are increasingly falling short of what’s needed to maintain and expand the country’s roads. In 2023, the Congressional Budget Office estimated a cumulative shortfall of $241 billion for the Federal Highway Fund's highway and mass transit spending through 2033.

The Bottom Line 

Given the increasing shortfalls, federal and state officials will need to consider how to keep paying for paving the country’s roadways and fixing its potholes. At the federal level alone, the cumulative funding shortfall in the Highway Trust Fund is expected to reach $241 billion by 2033.

While hiking the gas tax and allowing it to rise with inflation have become popular solutions to the funding shortfall, some states have also started charging electric vehicle owners an annual fee. The funding issue will likely only grow in urgency as the country’s infrastructure, already barely getting a passing grade, continues to age, with the American Society of Civil Engineers’ Report Card scoring its state a C-.

The good news is that the federal government budgeted $1.2 trillion toward infrastructure spending, including $110 billion for road and bridge repair and $39 billion to modernize transit, under the 澳洲幸运5官方开奖结果体彩网:In🦄frastrꦡucture Investment and Jobs Act passed in 2021.